Feb 10, 2022 From the IRS to the ITA
The good, the bad, and the ugly truth for Americans in Israel
There has been a lot of talk about how dysfunctional the IRS is these days. In 2021, out of 282 million calls to the IRS, only 11% were answered, and those who got to speak to a human being had to wait an average of 23 minutes. Add to that a backlog of 35 million returns, an outdated paper-based processing system, and an unprecedented number of refund delays, and it becomes evident that the IRS is facing a significant crisis.
And here’s the extra lousy news; for Americans living in Israel, the situation is even grimmer. Like all Americans living abroad, they have to deal with many more malfunctions that the IRS is suffering from.
Here’s a quick peek into what this looks like for an American living in Israel who has to deal with the IRS these days:
- In late 2021, the IRS unveiled a new online identity verification process for accessing self-help tools. Great? Not if you don’t have a US cell number (VOIP services like Google Voice don’t work). The sophisticated system does not support out-of-state numbers. This also has a ripple effect. Many people need an ID pin to file their tax return, which they can only receive through the new IRS ID system, which only works with a US cell number. Catch 22, isn’t it?! Additionally, the IRS has expressed that due to push back from gathering biometric information on U.S. citizens, they will be scrapping the new system and starting over with a different one. Here is hoping it doesn’t require a U.S. cell.
- IRS computers still spit out automatic notices which come late in the post and may be outdated once they reach the Israeli shore.
- The IRS only starts receiving phone calls at 3 PM Israel time, and if you thought you could save some money calling the IRS on an internet phone, you better think again. The connection can be highly unreliable, and many calls drop after waiting over an hour.
- And here’s a marriage from hell. The deterioration of the U.S. postal service, combined with the unreliability of the Israeli postal service, creates delays in responses from the IRS that can cause considerable penalties.
- The IRS has started automatically mailing people PINs for prior year’s returns. They will not re-mail them, and the new system doesn’t work for past years. The original PIN may have never arrived due to the post office issues. There is no easy way to fix this problem, and the return will need to be paper-filed. Mailing a return these days to the IRS means they throw it into a trailer and get to it when they get to it.
- The IRS has no local walk-in offices at the U.S. embassy or consulate, this makes sorting out issues even harder.
- Something else we encountered a lot; the additional child tax credit payments may have been paid to people living abroad who aren’t eligible for it. Prepare to pay it back! Read more about that here.
- You have a newborn? Mazal tov! Now, take a deep breath while you try to get the little one a social security number through the embassy or consulate. It’s not fun.
Is the grass really greener?
In the past we may have thought the “grass is greener” in the U.S. Well, you might be surprised to find out that the ITA (Israel Tax Authority) is functioning a lot better than the IRS these days.
- The ITA is completely digital while the IRS is still relying on…. faxes, yes faxes!
- Israel Tax Authority’s response time is reasonable, while the IRS is unreliable (and unresponsive…. 250 million Americans who are still waiting can attest to that).
- The ITA has regular office hours for walk-ins, many IRS locations for the public closed down in 2021.
- Payments to the ITA are generally done digitally through the Bank of Israel while the IRS does not allow access to or from Israeli banks.
Sorrow shared is sorrow halved
As taxpayers, we all deserve to have the IRS efficiently process and handle our taxes once we have done the arduous task of filing them. Unfortunately, that’s currently not the case. 2021 was challenging for everyone, the IRS included. We wish we could say 2022 will be better, but we’ve learned that with Covid-19, everything is subject to change. What we can assure you is that as your tax preparer, we’ve been as proactive as possible, and we’ll continue to be. And, if it’s any comfort, you are not alone. These challenges are real and valid, and they are shared by many. What can you do? DON’T take your frustration out on your tax preparer; take a deep breath, be patient, and remember that this too shall pass.